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Gouri Sankar Agarwalla Vs. H.P. Moitra - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1921Cal509,70Ind.Cas.379
AppellantGouri Sankar Agarwalla
RespondentH.P. Moitra
Cases ReferredKunjilal Monohar Das v. Durga Prasad
contract, breach of - agreement for sale of goods--delay due to unforseen cause--capture--doctrine of frustration, applicability of-contract act (ix of 1872), sections 9, 20, 56. - .....would be removed and on the authority of moorcock's case (1889) 14 p.d. 64 at p. 68 : 58 l.j. adm. 73 : 60 l.t 654 : 37 w.r. 439 : 6 asp. m.c. 373 and other cases it was held that a condition to that effect should be implied.40. it was assumed in the argument that the defendant was entitled to two or three cases out of the original 20 cases shipped. as only 17 cases arrived, it. was suggested that the plaintiff had no more right to any of these cases than to the three missing case but the suggestion was not pressed, possibly because it was thought that the claim would cover a claim for compensation in respect of the missing cases.41. in the result, i would answer the question referred to us in the negative.

Lancelot Sanderson, C.J.

1. I have read the judgment; about be delivered by my learned brother Mr. Justice Richatdson.

2. In my judgment the events that have been referred to in detail by my learned brother were not in the contemplation of the parties to the contract when the contract was made. It was made on the 21st January 1914, it was headed shipment and/or arrival: the goods were to be shipped in July and August 1914. In fact, the goods in question were shipped on Sections 'Spitzfels' a German ship which sailed from Hamburg on the 19th of July 1914 but they did not arrive in Calcutta until June 1916, more than two years from the date of the contract. This was due to the outbreak of war in August 1914 and to the capture of the Sections 'Spitzfels.' The goods were transhipped to Sections 'Alavi' under the circumstances detailed in my learned brother's judgment.

3. In my judgment, the arrival of the goods in June 1916 after the events that happened was not such an arrival as was contemplated by the parties to the contract.

4. In my judgment, the purpose of the contract and the intention of the parties to the contract were all altogether upset by the capture of the Sections 'Spitzfels' by the prolonged delay and by the other circumstances which were the result thereof, consequently, in my judgment the defendants were not bound to deliver the goods to the plaintiff when they eventually did arrival in Calcutta in June 1916.

5. In my judgment, the answer to the question that the learned Chief Judge of the Small Cause Court has referred to this Court should be in the negative.

6. The plaintiff must pay the costs of the reference.

7. We think that there should be two Counsel's fees and two Attorney's fees-one for each hearing.

Richardson, J.

8. This is a reference by Mr. Thornhili, the learned Chief Judge of the Calcutta Court of Small Causes, from whose order the facts about to be stated are taken. The facts are either undisputed or concluded by the Chief Judge's findings.

9. The defendant in the suit contracted to supply the plaintiff with five cases of white shawl cloth shipment July and August 1914. The contract is dated 21st January 1914.

10. The defendant had previculy ordered 50 cases of white Shawl cloth from sellers in London. Of these 50 cases he sold 22 to buyers in Calcutta including the five cases sold to the plaintiff.

11. In part fulfillment of the defendant's order 20 cases was shipped in July 1914 by his sellers in the Sections 'Spitzfels' Hamburg to Calcutta, C.I.F.C. Calcutta to the order and on account and risk of the defendant. The 'Spitzfels,' a German ship, was captured by the British in. the Mediterranean shortly after the outbreak of war and was condemned as prize. Under Government orders the cargoor portion of it was transhipped at Alexandria into the Sections 'Alavi,' which arrived in Calcutta in June 1916, that is, nearly two years late, with 17 only out of the defendant's. 20 cases on board. The goods were cleared by the defendant or his agents some time about the 10th June 1916.

12. The proceedings of the Prize Court are not in evidence and the Chief Judge state's that there is nothing to show that any particular conditions attached to the goods by reason of those proceedings save that the delivery to the consignees was conditional upon payment of extra charges in the nature of transhipping and forwarding expenses, etc. which amounted to Rs. 3,038-11-0 for the 17 cases. The charges were paid by the defendant.

13. The defendant also paid the drafts for the whole 20 cases, together with the interest which had accumulated thereon, He further paid deviation insurance, and so forth. He sent in a claim for the three cases short delivered.

14. The contract between the parties to the suit is headed 'contract Shipment and/or arrival.' The first Clause is introductory. The second Clause is a long one. It lays down that the buyers shall take delivery of the goods within a fixed number of days from the respective days of arrival and contains other provisions relating to delivery and payment.

15. Clauses 3 and 4 are as follows:

3. Should the goods or any portion of same not have been shipped or not, have arrived at the expiration of the time stipulated the sellers, on the facts coming to their knowledge, shall immediately notify the buyers and the buyers must within two days of their receipt of notice from sellers, declare whether they are prepared to grant an extension of time for shipment or arrival of the portion overdue, otherwise this portion of the contract shall be considered as cancelled, and the sellers shall not be responsible for any such non-fulfilment of contract. Should the goods or any portion of same not have been shipped owing to suppliers and for producers stopping payment, or being prevented by accidents to or the destruction of works from preparing same, the contract shall be rescinded for that portion not shipped.

4. Buyers will not have the right to cancel this contract or any portion thereof if the goods from any unavoidable cause such as strikes of operatives, dock labourers, carriers, seamen, accidents to railways, or any other force majeure are shipped later than the shipment dates contracted for, provided that such delay in shipment shall not exceed the period of one month.

16. Under Clause 8 the agreement is to be construed as a separate contract in respect of each instalment of goods.

17. Clause 10 says: 'The entry of the vessel at the Customs House means arrival under this contract. Loss of the vessel cancels the portion of this contract shipped in the vessel lost.'

18. The Chief Judge has found 'that the defendant intended to perform his July part of the contracts with his buyers by allotting to them cases out of such consignment or consignments as might arrive in ordinary course by the Sections 'Spitzfels or any other ship.' It is further found that the defendant did not inform the plaintiff of the arrival of the 17 cases in June 1916. He similarly ignored his other buyers of 1914, and assuming complete dominion over the goods sold or re-sold them to other dealers at a profit to him self, the market having risen. Further, when the plaintiff in July 1917, in consequence of information. Which he had received, addressed an enquiry on the subject to the defendant the latter replied that the goods had never been shipped. The plaintiff, however, was not deterred. He tendered the contract price for three cases on the footing that they represented the July shipment & under his contract. He then brought the present suit to recover Rs. 1,987-8 damages for their non-delivery. At the time he Was not aware of the extra charges paid by the defendant, but during the hearing of the suit he expressed his willingness to pay those charges, the market being then favourable.

19. It may be added, that the goods being of German origin, the plaintiff made no claim in respect of his remaining two cases, on the footing that they might have been shipped in August and that the rule against trading with the enemy excused the defendant from performing that part of his contract.

20. The suit came twice before the learned Chief Judge. On the first occasion the dismissed it, holding, as he says, on the construction of the contract, 'that the contract was conditional on the arrival of the goods in Calcutta in the ordinary course of navigation.'

21. During the temporal absence of Mr. Thornhill, the Full Bench of the Court of Small Causes set aside the dismissal and directed a re-trial. Having re-tried it, the learned Judge has again dismissed the suit, this time subject to the opinion of the High Court on the substantial question of law arising, which he states as follows:

Whether, having regard to the capture of the Sections 'Spitzfels' and transhipment 'to the Sections 'Alavi' the plaintiff was entitled to the delivery of the goods on their arrival in Calcutta in June 1916, in the same manner as if there had been no interruption.

22. I agree with the Chief Judge that, regard being had to the events which happened, the contract had ceased to be operative when the goods arrived in 1916, though it is open to question whether the contract was 'conditional on the arrival of the goods in due course of navigation.'

23. As to the heading 'contract shipment and for arrival', the goods were in fact shipped and did ultimately arrive. The contract appears to be silent as regards delay in arrival apart from delay in shipment and loss of the ship. It was net contended that loss of the ship it eludes captures: Horlock v. Beal (1916) 1. A.C. 486 : 85 L.J.K.B. 602 : 114 L.T. 193 : 21 Com. Cas. 201 : 60 S.J. 236 : 32 T.L.R. 251. As the goods were shipped in time the provision made for extending the time of shipment (with a corresponding or relative extension of time of arrival) does not assist the plaintiff. The parties, therefore, would seem to have left the matter of delay after shipment unprovided for though 'delay even of considerable length and of wholly uncertain duration is an incident of maritime adventure: 'Bank Line Limited v. Capel and Co. (1919) A.C. 435 at p. 458 : 88 L.J.K. 211 : 120 L.T. 129 : 14 Asp. M.C. 370 : 63 S.J 177 : 35 T.L.R. 150.

24. Such cases as that of Idle v. Thornton (1812) 3 Camp. 274 : 13 R.R. 799 which the Chief Judge cites, are of no assistance. In that case, the parties expressly agreed that if the goods should not arrive before a named date, the bargain should be void. It was held that arrival within the date was a condition precedent.

25. There is no such express agreement in the present case and I am not satisfied that a condition in the particular form suggested could be imported into the contract nor am I aware what its precise effect would be on the delay here (where the deviation was involuntary) or on delays of other descriptions. There may be delays of which the parties 'took their chance.'

26. If the contract of affreightment between the defendant and his shippers became illegal owing to the outbreak of war, it may be that the contract between the plaintiff and the defendant fell with it, but the question of illegality was not raised and in my opinion the conclusion that the events which happened dissolved the Contract may be supported by recourse to the doctrine of frustration which the learned Judge also calls in aid.

27. According to that doctrine, a subsequent event or contingency beyond the ken of the parties at the time of the transaction, for the occurrence of which neither of them is responsible and for which they have not provided may sometimes operate to undermine and avoid the contract between them. The doctrine is illustrated in a number of recent English cases, four of which in particular-now the principal cases on the topic-went to the House of Lords Horlook v. Beal (1916) I.A.C. 486 : 85 L.J.K.B. 602 : 114 I.L.T. 193 : Com. Cas. 201 : 60 S.J. 236 : 32 T.L.R. 251. Where the earlier cases are considered and classified; Tamplin Steamship Co. v. Anglv-Mexican Petroleum. Products Co. (1916) 2 A.C. 397 : 85 L.J.K.B. 1389 : 115 L.T. 315 : 21 Com. Cas. 299 : 32 T.I.R. 677 Metropolitan Water Board v. Dick, Kerr and Co. (1918) A.C. 119 : 87 L.J.K.B. 370 : 117 L.T. 766 : 82 J.P. 61; 16L. C.R.I. : 23 Com. Cas. 148 : 62 S.J. 102 : 34 T.L.R. 113 and Bank Line Limited v. Capel and Co. (1812) 3 Camp. 274 : 13 R.R. 799 the doctrine may have its limitations. It may not be applicable in every case where the unexpected happens with serious consequences. It may apply only in exceptional cases. But in my opinion it is applicable to the facts of the present case.

28. In one of the earlier cases Baily v. De Crespigny (1869) 4 Q.B. 180 : 38 L.J.Q.B. 98 : 19 L.T. 618 : 17 W.R. 494. Where land, the subject matter of a covenant by the plaintiff in favour of the defendant, was compulsorily acquired and the defendant was held discharged from the Covenant, Hannen, J. in a passage often cited said:

There can be no doubt that a man may by an absolute contract bind himself to perform things which subsequently become impossible, or to pay damages for the non-performance, and this construction is to be put upon an unqualified undertaking, where the event which causes the impossibility was or might have been anticipated and guarded against in the contract, or where the impossibility arises from the act or default of the promissor. But where the event is of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made, they will not be held bound by general words Which though large enough to include, were. Not used with reference to the possibility of the particular contingency, which afterwards happens.

29. The learned Chief Judge cites the language of Lord Loreburn in the Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. (1916) 2 A.C. 397 : 85 L.J.K.B. 1389 : 115 L.T. 315 : 21 Com. Com. 299 : 32 T.L.R. 677.

A Court can and ought to examine the contract and the circumstances in which it was made, not of course to very, but only to explain it, in order to see whether or not the parties must have made their bargain on the footing that a particular thing or state of things would continue to exist. And if they must have done so, then a term to that effect will be implied, though it to be not expressed in the contract. In applying this rule it is manifest that such a term can rarely be implied except where the discontinuance is such as to upset altogether the purpose of the contract. Some delay or some change is very common in all human affairs, and it cannot be supposed that any bargain has been made on the tacit condition that such a thing will not happen in any degree.

30. The principle so stated applies to all contracts. In commercial cases it is applied where the commercial object of the contract has been frustrated by the intrusion or occurrence of an unexpected event, creating a state of things in which the parties could not reasonably have intended that the contract, as they made it, should be operative. An exception or condition precedent to that effect may then be imported. The result does not depend merely or chiefly on calculations of profit and as it has been -more than once pointed out, the difficulty lies not so much in the statement of the principle as in its application. In same cases the facts seem to speak for themselves. In others, where the effect of the unexpected event has been more or less temporary Judges of the highest eminence have' reached different conclusions.

31. Treating the question as one of construction, regard must be had to the nature and circumstances of the particular transaction; and the implied term though it may be an addition to the contract must be consistent with that express terms and with the intentions of the gathered from those terms. 'No Court has a power of absolution' and special care must be taken to avoid making a new contract for the parties.

32. Now, what are the facts here? The seller was not in default. The capture was an act of State. The capture amounted to a seizure of the ship and at any rate a detention of the goods. The ship and no doubt the goods also became the subject of proceedings in prize. The goods did not cease to exist but there was a discontinuance their availability to the parties aid the delay which was likely to occur and did in fact occur was of long duration. The seller was deprived of his goods for the time being. The charges which he subsequently paid in order to recover them were in the nature of salvage. The event was entirely unforeseen. At the same time, there is nothing in the contract or in the nature of the transaction inconsistent with a term which need not be larger than this, that should war supervene and the vessel or the goods be captured by a belligerent with resulting delay the contract should be at an end. 'With that condition implied the capture and the delay terminated the contract and the subsequent arrival of the goods in Calculate. Would not revive it without a new Agreement between the parties.

33. The authorities show that the subject matter of the contract need not cease to exist or be permanently rendered unavailable to the parties. The importance of delay in the region of commerce is recognised. In Metropolitan Water board's case (1918) A.C. 119 : 87 L.J.K.B. 370 : 117 L.T. 766 : 82 J.P. 61 : 16 L.G.R. 1 : 23 Com. Cas. 148 : 62 S.J. 102 : 34 T.L.R. 113 Lord Dunedm said: 'An interruption may be so long as to destroy the identity of the work or service, when resumed, with the work, or service when interruped.' Lord Atkinson spoke of 'an interruption so great and long as to make it unreasonable to require the parties to go on.' Lord Sumner in the Bank Line's case (1919) A.C. 435 at p. 458 : 88 L.J.K.B. 211 : 120 L.T. 129 : 14 Asp. M.C. 370 : 63 S.J. 177 : 35 T.L.R. 150 strikes a note of warning, 'I agree he says (page 454) 'in the importance of this feature, though it may not be the main and certainly is not the only matter to be considered. The probabilities as to the length of the deprivation and not the certainty arrived at after the event are also material. The question must be considered at the trial as it had to be considered by the parties, when they came to know of the cause and the probabilities of the delay and had to decide what to do.... Rights ought not to be left in suspense or to hang on the chances of subsequent events. The contract binds or it does not bind, and the law ought to be that the parties can gather their fate then and there. What happens afterwards may assist in showing what the probabilities really were, if they had been reasonably forecasted, but when the causes of frustration have operated so long or under such circumstances as to taise a presumption of inordinate dele the time has arrived at which the fate of fact contract falls to be decided. That fate is dissolution continuance and if the charter ought to be held to be dissolved, it cannot be revived without a hew contract. The parties are free.'

34. In Metropolitan Water Board v. Dick Keer and Co. (1917) 2 K.B. 1 : 86 L.J.K.B. 675 : 116 L.T. 201 : 81 J.P. 181 : 15 L.G.R. 425: Scrutton, L.J., in the Court of Appeal, expressed himself as follows: 'Strictly, in my opinion, a party to a contract who claims that on a particular day the contract is abrogated takes the burden of proving that on that day the interruption is so serious as to award the contract. To use the words of Lord Halsbury in Bensaude v. Thames and Mersey Marine Insurance Co. (1897) A.C. 609 at P. 611 : 66 L.J.Q.B. 315 : 2 Com. Cas. 238 : 13 T.L.R. 501. It would be only a question, of evidence which one might ascertains that time, or wait until the facts had proved it by the occurrence of those facts subsequently'.

35. In the present case the delay and the probability of delay were amply sufficient to justify the conclusion that the contract in a business sense perished with or after the capture, long before the goods arrived in Calcutta.

36. The test may be applied which is suggested by the Chief Judge. What if the market had fallen, could take defendant have forced these goods on the plaintiff, however, unwilling the plaintiff might be to take them? Could the plaintiff have been compelled to pay the Prize Court charges?

37. I may add that Section 56 of the Contract Act only applies to physical impossibility and, therefore, does not cover every case of frustration Goculdas Madhavji v. Narsu Yenkuji 13 B. 630 : Chitty's S.C.C.R. 227 : 7 Ind. Dec. (N.S.) 416. Karl Ettlinger and Co. v. Chagandas and Co. 33 Ind. Cas. 205 : 40 B. 301 : 17 Bom. Section 9 of the Act, however, recognizes that promises may be implied.

38. Section 20 of the Act deals with the case of a common mistake at the time of the transaction 'as to matter of fact essential to the agreement.' Perhaps, a general principle of frustration depending on construction might be so stated as to cover that.

39. The case of Goculdas Madhavji v. Narsu Yenkuji 13 B. 630 : Chitty's S.C.C.R. 227 : 7 Ind. Dec. (N.S) 416 is of interest. The defendant had agreed to pay the plaintiff an annual sum for permission to quarry stone on the plaintiff's land. The defendant possessed a municipal license to quarry by blasting. Through no fault of the defendant the license was withdrawn. It was held that the withdrawal terminated the contract. In the course of the argument urgent, C.J. said that Section 56 of the Contract Act had nothing to do with the case and that it was purely a case of construction of the contract I find that in a very recent case Kunjilal Monohar Das v. Durga Prasad 58 Ind. Cas. 761 : 24 C.W.N. 703. The principle has been applied by Rankin, J. 'That was, a decision on a special case in which it had been found that the parties contracted on the assumption that the Government control over Railway wagons would be removed and on the authority of Moorcock's case (1889) 14 P.D. 64 at p. 68 : 58 L.J. Adm. 73 : 60 L.T 654 : 37 W.R. 439 : 6 Asp. M.C. 373 and other cases it was held that a condition to that effect should be implied.

40. It was assumed in the argument that the defendant was entitled to two or three cases out of the original 20 cases shipped. As only 17 cases arrived, it. Was suggested that the plaintiff had no more right to any of these cases than to the three missing case but the suggestion was not pressed, possibly because it was thought that the claim would cover a claim for compensation in respect of the missing cases.

41. In the result, I would answer the question referred to us in the negative.

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